Fonterra raises milk payments for VIC and TAS suppliers

Fonterra Australia has announced its lifting it milk payments for supplier in Victoria and Tasmania, bringing its average farmgate price up to $6.80 per kilogram of milk solids.

Fonterra has raised the price per kilogram of butterfat by eight cents and the price per kilogram of protein by 20 cents, for the 2013/14 season.

Judith Swales, managing director, Fonterra Australia, said the price step up continues the company’s price leadership for the season.

“We are pleased to deliver these market returns back to our suppliers as soon as they are realised through our global and domestic sales. It is an essential part of our commitment to driving profitability on farm,” Swales said. “While commodity prices are coming off record highs due to increased global production, international demand is still strong and prices are above long term averages. We remain focused on meeting our international and domestic customers’ demand – in full and on time.”

“It’s great to see we are in the closing price range already. It should give suppliers confidence that Fonterra Australia is not only leading the industry with services like SupportCrew, but also keeping up their leadership on price. This combination of factors really gives farmers the tools they need to stay profitable, grow and continue to build their farm assets.”

In April, Fonterra has announced an overhaul of its milk pricing structure, claiming the new approach will help farmers make informed decisions.

The key changes include:

A simplified base price where multiple seasonal tables are simplified into one seasonal table for all suppliers based on a five/seven, peak/off peak split.

SRP (seasonal ratio payment) will be removed and reinvested into off-peak pricing to reduce risk for farmers and maintain a price signal for the value of off-peak milk

Growth incentive replaced and reinvested back into base price and growth will be supported outside the pricing system to make it more attractive and material for farmers in an expansion phase